Indonesia Update: August 9, 2018

One day before the August 10 deadline of registering candidates for next year’s presidential election, President Jokowi announced KH Ma’ruf Amin as his running mate. Ma’ruf Amin is the leader of Nahdlatul Ulama Central Board and the chairman of Indonesian Ulema Council (Majelis Ulama Indonesia, MUI). The Council is a central authority that issues fatwas (a ruling on a point of Islamic law) and it provides recommendations on issuing halal certificates. He was a member of the Presidential Advisory Council (Dewan Pertimbangan Presiden, Wantimpres) during the administration of Susilo Bambang Yudhoyono, he also served as a parliament member.

Separately on the same day, Prabowo Subianto announced Sandiaga Uno as his running mate. The incumbent deputy governor of Jakarta tendered his resignation not long before. Prabowo and Sandiaga Uno are supported by a coalition of Gerindra, PAN, and PKS. Previously, the coalition held talks with the Democratic Party on the possibility of the party joining the coalition and touting Agus Harimurti Yudhoyono as a potential running mate for Prabowo. It is unclear whether the party will still join the coalition supporting Prabowo’s candidacy.

Secretary of State Mike Pompeo’s Visit to Indonesia

U.S. Secretary of State Mike Pompeo met President Joko “Jokowi” Widodo in Jakarta on August 6 as part of his visits to Malaysia, Singapore, and Indonesia. This is his first visit to Indonesia since being appointed Secretary of State in April. He arrived in Jakarta on August 4 after attending the East Asia Summit ministerial meeting and the ASEAN Regional Forum in Singapore. President Jokowi was accompanied by Foreign Minister Retno Marsudi, Trade Minister Enggartiasto Lukita, State Secretary Pratikno, and Indonesian Ambassador to the U.S. Budi Bowoleksono.

Secretary Pompeo reiterated that the country is a strategic partner of the United States ahead of the 70th anniversary of the bilateral relationship next year and that it valued the growth of democracy in Indonesia. The security situation in the Korean Peninsula and the trade relationship between Washington and Jakarta were reportedly discussed. Minister Retno stated that President Jokowi has expressed to Secretary Pompeo of his hope that the U.S. preferential tariff scheme Generalized System of Preference (GSP) will be maintained. Indonesia currently enjoys lower tariffs on approximately USD2 billion of exports to the U.S. based on the scheme. Previously, on July 30, at a speech in Washington, DC, Secretary Pompeo unveiled a funding initiative open for countries in Southeast Asia in areas of technology, energy, and infrastructure. The USD113 million funding is part of the economic strategy of President Donald Trump for a “free and open Indo-Pacific”.

Indonesia’s Jokowi to Partner With Cleric in Bid for Second TermBloomberg 9th Aug 2018
Indonesian President Joko Widodo picked Ma’ruf Amin, the head of the nation’s influential clerics’ council, as his running mate for next year’s election, setting the stage for a rerun of the 2014 race with former general Prabowo Subianto.

Indonesia’s election battle takes shape as candidates name VP picksSouth China Morning Post 9th Aug 2018
Indonesian President Joko Widodo has chosen 75-year-old cleric Ma’ruf Amin as his running mate in next year’s presidential election, he said on Thursday, in a sign he wants to bolster his Islamic credentials. The two will likely be challenged by former general Prabowo Subianto.

PAN may join Jokowi's camp, PDI-P saysThe Jakarta Post 7th Aug 2018
There is a likelihood that the National Mandate Party (PAN) joins the coalition of parties that backs President Joko “Jokowi” Widodo’s reelection bid, despite uncertainty over whether the party will support him in the 2019 presidential election, a senior politician from the Indonesian Democratic Party of Struggle (PDI-P) has said.

Jokowi, Prabowo could buy more time in VP selectionThe Jakarta Post 7th Aug 2018
As political parties continue to wrangle over who will fill the vice presidential slots and are likely to miss the Aug. 10 deadline, new provisions in election regulations may allow for both incumbent President Joko “Jokowi” Widodo and his challenger Prabowo Subianto to buy more time.

Group of ulemas pushes for VP slot in Prabowo coalitionThe Jakarta Post 7th Aug 2018
Ulemas and Muslim activists united under the National Movement to Safeguard the Ulema Fatwa (GNPF) are pushing Gerindra Party chairman Prabowo Subianto over the certainty of a vice president candidate.

Indonesia Lobbies US for Aluminum Duty ExemptionTempo 8th Aug 2018
Enggartiasto said America charges 25 percent duty for aluminum import. "I told them that our market share in America is only 0.23 percent, and [our product] is not made in America, and is used by the American industry, including Boeing," he said.

Indonesia`s WTO Trade Sanction, Expert Suggests Reducing ImportsTempo 8th Aug 2018
Economist from the University of Indonesia Fithra Faisal Hastiadi said that the government should have prepared an early anticipation measure after applying its 18 non-tariff restrictions on animal and horticulture imports, which caused Indonesia to lose a dispute with the United States at the World Trade Organization (WTO).

API Integration into the OSS SystemHukum Online 8th Aug 2018
The Minister of Trade (“Minister”) has issued Regulation No. 75 of 2018 on Importer Identification Numbers (“Regulation 75/2018”), which is an implementing regulation for Regulation of Government No. 24 of 2018 on the Electronically Integrated Business Licensing Service (“Regulation 24/2018”).

US seeks $350 million annual sanctions in Indonesia trade disputeReuters 6th Aug 2018
The United States has asked the World Trade Organization to let it impose sanctions on Indonesia after winning a trade dispute that it said cost U.S. business up to $350 million in 2017, a U.S. filing published by the WTO showed on Monday. The United States and New Zealand both won WTO rulings last year against Indonesian import restrictions on food, plants and animal products, including apples, grapes, potatoes, onions, flowers, juice, dried fruit, cattle, chicken and beef.

Indonesia lobbies to maintain special tariff treatmentReuters 5th Aug 2018
Indonesia lobbied visiting U.S. Secretary of State Mike Pompeo to keep the Southeast Asian nation on a list of countries that receive preferential trade terms, its foreign and trade ministers said on Sunday. “President Joko Widodo has delivered Indonesia’s hope that the U.S. will maintain the country’s GSP (Generalized System of Preferences) facility,” Foreign Minister Retno Marsudi told reporters after meeting Pompeo.

What’s Next for China-Indonesia Military Ties?The Diplomat 6th Aug 2018
Last week, Jakarta was one of the Asian capitals which hosted a commemoration of this year’s anniversary of the founding of China’s People’s Liberation Army (PLA).

Economics

Foreign exchange reserve declines to US$118.3b in JulyThe Jakarta Post 8th Aug 2018
Indonesia’s foreign exchange reserve declined by US$1.5 billion to $118.3 billion in July, Bank Indonesia (BI) reported on Tuesday, lower than $119.8 billion reserve in June as the central bank continues its market intervention to prevent the rupiah from sliding further against the US dollar.

Indonesia to Seek Clarity From WTO on US Trade DisputeJakarta Globe 8th Aug 2018
Indonesia will clarify its position with the World Trade Organization after the United States asked the multilateral body to allow it to impose sanctions on Southeast Asia's biggest economy after winning a trade dispute that it claims had cost US business up to $350 million in 2017.

US Seeks $350m Annual Sanctions in Indonesia Trade DisputeJakarta Globe 7th Aug 2018
The United States has asked the World Trade Organization to let it impose sanctions on Indonesia after winning a trade dispute that it said cost US business up to $350 million in 2017, a US filing published by the WTO showed on Monday (06/08).

Pertamina required to share down Rokan BlockThe Jakarta Post 8th Aug 2018
Deputy Energy and Mineral Resources Minister Arcandra Tahar says the government requires state-owned oil and gas holding company Pertamina to have a partner to operate the Rokan Block, the most lucrative oil and gas block in Riau.

Medco’s net profit slumps in H1The Jakarta Post 6th Aug 2018
Publicly listed energy firm Medco Energi International saw its net profit fall 48.6 percent year-on-year (yoy) to US$41.4 million in the first half of this year, from $80.6 million in the same period of 2017.

Lapindo Brantas operatorship of Brantas Block extended until 2040The Jakarta Post 3rd Aug 2018
The government extended on Friday the operatorship of the existing operator of the Brantas Block, Lapindo Brantas Inc, until 2040, after a delay caused by an administrative matter, namely the payment of a signature bonus and performance bonds.

Cikarang Listrindo records 28% drop in net profitThe Jakarta Post 3rd Aug 2018
Publicly listed independent power company PT Cikarang Listrindo booked US$40.35 million in net profit in the first half of the year, down 28.04 percent year-on-year (yoy) from a decline in revenue and an increase in financing costs.

PLN to supply electricity to five Pertamina refineriesThe Jakarta Post 3rd Aug 2018
State-owned electricity company PLN has signed an agreement with state-owned oil and gas holding company Pertamina to supply electricity to its refineries in Dumai in Riau, Cilacap in Central Java, Balongan in West Java, Balikpapan in East Kalimantan and Plaju-Sungai Gerong in South Sumatra.

Financial Services

Indonesia: Green financing gets leg up via IFC's Bank OCBC NISP investmentAsia Insurance Review 8th Aug 2018
The International Finance Corporation (IFC), the private sector arm of the World Bank Group, has committed $150m in a green bond issued by Indonesia PT. Bank OCBC NISP Tbk (Bank OCBC NISP). This is the first ever green bond issued by a commercial bank in Indonesia, delivering a new source of green financing to combat climate change, announced the IFC in a statement last week.

Bank Indonesia pushes use of national payment gatewayThe Jakarta Post 6th Aug 2018
Bank Indonesia is stepping up efforts to increase consumers’ use of the newly established national payment gateway (GPN), according to interbank network provider PT. Artajasa Pembayaran Elektronis. Artajasa business director Anthoni Morris Morris said on Saturday that BI planned to carry out a number of programs in the second half of 2018, including the mass production and use of debit cards with the GPN logo in electronic data capture (EDC) terminals.

Infrastructure

Indonesia invites Russia to invest in tourism, infrastructureThe Jakarta Post 6th Aug 2018
National Development Planning Minister Bambang Brodjonegoro has invited Russian business people to invest in tourism and infrastructure, two sectors that are being given serious attention by the Indonesian government.